Wednesday 1 December 2010

Something is wrong.

The Unravelling 

You could protest and riot when the economy disintegrates like some kind of Albanian state sponsored pyramid scheme. Or prepare and ride out the storm.
Our beloved 'great recession' started in late 2007.  The moment the Bank of England announced Quantitative Easing I walked into the local jewellers and bought a gold sovereign for £75 cash.  Today, 3 years later, that same coin costs £223 to buy.
Quantitative Easing(QE), we were informed was not money printing.  We all know that money printing leads to hyper inflation and people lose their life savings. So it wasn't money printing at all but it was for allowing money to the banks so they can lend to small business and keep the economy working. Small business' didn't get those loans but bankers had impressive bonuses.
Three years after the announcement of QE what has the man in the street got?  Savings that go down in value because the interest rate is lower than inflation.
£1.20 for a litre of petrol.
Private pensions not keeping up with inflation.
House prices are about to fall another 20%
http://blogs.telegraph.co.uk/finance/ianmcowie/100008832/you-aint-seen-nothing-yet-why-house-prices-could-fall-by-another-20-per-cent/
Austerity measures where you get less but pay more.
500,000 expected lay offs in the public sector.
VAT to rise to 20% in Janary 2011

Britain is actually doing better than the European Union (EU). Ireland has been virtually forced to take an 85billion Euro loan, even though it is impossible for it to pay it's existing loans. After them it's Portugal.

This is why I set up buycopper.com selling pure copper bars and pure silver coins. This is real money strangely enough. I suppose right now you can't buy a few litres of fuel with a copper bar, but one day it may be the case. In 1990's post collapse Russia you could trade it for fuel.
The money we use every day is baseless.  It is just a picture on a piece of paper. A promise that you have to believe in to make it have value.
Here is a chart of the price of silver over the 2 years (Pounds Sterling). The spike in price is mainly because of the drop in value of all major currencies. It's not the price of silver going up, but the value of the Pound going down.
There's are a couple of other factors.
People know metal is a good hedge against inflation so buy it and push the price higher.
Silver stock is probably running short, because silver is often mined along side other metals, a by product if you will. If the industrial metal mine shuts down because of the great recession so does silver production, leading to future price spikes.
Copper
It took over a month to get the copper bar I used for the copper bullion bars I sell.  I suspect the supply graph below is the reason why.

The State
The article below shows that when deficits become too much for a country, they turn on the people.  Your pension. After all, that's where all the money is.  So, they force you to hand over control of your money to them.  
If you buy metals that you keep somewhere dry and safe, you keep control of your hard work. The government can't take it off you.  You can take the gold, silver, copper, tin, zinc or whatever to a jewellers or a scrap merchant and trade it for cash.  Inflation hasn't had any effect on it. Although prices do go up and down for metals I hasten to add. Metals are a long term investment, but worth it all the same.

Here's a final thought.  This Bank of Zimbabwe note has no value whatsoever, unless you sell it on Ebay as some kind of curio or joke. When this was printed, people couldn't use it to trade for a 1 kilo bar of copper.  It was just an empty promise.

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